A family’s financial situation can change after the children leave home, perhaps going to college or starting to live on their own.
This is when parents need to come up with a plan for the future. There are many different options available to help empty nesters deal with their finances and make better decisions about their finances. Unfortunately, before parents decide on making sensible financial decisions, many empty nesters make poor financial decisions based on emotion rather than logic. The following article covers some of the most common financial mistakes made by empty nesters.
Going On a Spending Spree
It is easy for parents to get carried away when they no longer need to pay for their children’s expenses. Instead of saving their surplus money, they go on a spending spree. Buying presents for family and friends, getting a new car, or going on vacation can be expensive. The high prices of these things can lead to unnecessary expenses and debt later on.
Delaying Downsizing a Home
Every family wants a home big enough for everyone, one with enough bedrooms, bathrooms, and space for their large family. However, once the size of the family drops down to only two people, then it’s not a good idea to repurpose the children’s now-vacated bedrooms. Instead, the sensible thing is to move to a smaller house to reduce the mortgage or maintenance costs.
Failing to Invest
While it’s true that investing is a long game because the financial market is volatile and many people lose their money on short-term trades, this doesn’t mean that one should not invest at all. It’s never too late to invest even if the market fluctuates according to the price of stocks, bonds, commodities, and other assets. Investing in anything short-term may be a risky venture, but it’s never too late to invest for the long term.
The fix for all these financial mistakes is to not make them in the first place—and do the opposite of the urge to act emotionally and impulsively. Instead of going on a spending spree, put any surplus income into savings. Instead of living in a large home that has outlived its usefulness, move to a smaller home. And instead of not investing at all because of market volatility, take the leap and begin investing for the long-term.
This blog/website is only made available for educational purposes. It is designed to give visitors general information and a general understanding of select financial topics. It is not intended to provide specific financial or investment advice. Conduct your own due diligence or consult a licensed financial advisor/broker before making any and all financial/investment decisions.